Late last week, I got back-to-back calls from two vendors of American Freight, the retail chain based in Delaware, Ohio.
Prior to operating as American Freight, the chain of some 300 stores was formerly better known as Sears Surplus, Sears Outlet.
According to my sources, each of the vendors, along with many other of American Freight’s suppliers, had been called to a two-day meeting at the retailer’s headquarters.
From what I have been told, the purpose of that meeting, which the vendors say was headed by American Freight’s Chief Merchandising Officer Alissa Ahlman, was allegedly to request that all vendors in attendance find a means to bypass their independent sales reps and, in doing so, give the value of the rep’s commission back to the retailer.
Naturally, the first thing I did after hearing these allegations was to leave emails and voicemails to Ms. Ahlman to give her an opportunity to either confirm or deny these allegations.
It has now been a number of days since I attempted to reach out to the retailer, but my requests for comments have gone unanswered.
So, in the spirit of fair play, let me state that since Ahlman, or anyone else from American Freight has not responded to my emails or voicemails, the claims that the retailer is encouraging vendors to eliminate their reps has not been confirmed.
However, since I heard these claims from more than one source — and since the claim in each case was identical — I am going to write the rest of this column on the assumption that the vendors’ information is correct.
So, from that assumption, I think that while tough times call for tough decisions, this move on the part of American Freight goes far beyond tough. In my book, and in my opinion, it is unfair and ruthless.
Again, assuming the vendor’s claims are accurate, my second reaction (my first reaction being outrage) might have me wondering about the fiscal soundness of any retailer who suddenly seemed to need a rep’s commission.
Just for the proverbial grins and giggles, let’s use 2% as a yardstick for what the rep’s commission would normally be for selling to American Freight.
First off, a good rep delivers far more in value, market intelligence, in-store training and product knowledge than his or her 2% commission.
And let’s also take a look at the signal being sent by any retailer who asks the vendor to essentially take bread off the rep’s table, so the retailer can have an extra slice on his.
Lastly, I think a move like this has the potential to open the door to a flurry of litigation on the part of the rep, depending upon the wording and previous agreements made between the rep, the factory and possibly the retailer.
In a perfect world, the rep is one of three legs on that three-legged stool. The retailer is the second leg, with the supplier representing the third leg.
All three are needed in order to keep the stool level, balanced and sturdy.
However, that’s how it should be in a perfect world. Clearly, when things like this allegedly happen, we don’t live in a perfect world.
It seems as times get tougher, it is becoming perfectly acceptable to make decisions that are so far from perfect as to be just plain wrong.
To hear about this alleged request from American Freight, on the heels of the recent shutdown at Klaussner Furniture, makes me begin to question the ethics — or lack of them — bubbling to the surface.
I wonder how some 900 workers felt the day that Klaussner turned off the lights without warning?
I guess I should not be surprised. Sadly, we’ve seen this happen over and over, especially when venture capital peeps get involved. Need proof? Just ask the folks who once worked at Furniture Brands, Art Van, Levitz, etc.
I had lots of friends at Klaussner and they told me none of the executives gave them the courtesy of a face-to-face to deliver the bad news. Word that they were out of work somehow made its way throughout the office and factories and by 5 p.m. that day, there was a burly guard at the entrance to the facility.
The company blamed the shutdown on sudden and unexpected news that the lender had pulled out. Seems more likely that the shutdown was the result of bad management.
It’s too late to say anything to the executive team at Klaussner (other than thanks for nothing), but assuming the situation at American Freight is as those vendors told me it is … my final thought is this: Do you really need the rep’s couple of points that badly?